April 10 (Bloomberg) -- Family Dollar Stores Inc., facing
an increase in retail competition, is closing about 370 stores
and conducting a review to improve its business.

The closings, about 4.6 percent of the company’s 8,100
locations, will generate as much as $45 million in annual cost
savings beginning in the fiscal third quarter, the Matthews,
North Carolina-based company said today in a statement. The
review includes cutting an unspecified number of jobs, lowering
prices on about 1,000 items and slowing new store growth.

Family Dollar, whose largest shareholder is billionaire
hedge-fund manager John Paulson, is contending with more
competition from rival discount chains and big-box retailers
such as Target Corp. and Wal-Mart Stores Inc. Revenue at Family
Dollar is projected to rise 1.7 percent this fiscal year,
according to the average of analysts’ estimates compiled by
Bloomberg, after gaining 11 percent last year.

The company will book a restructuring charge in the second
half of this fiscal year of $85 million to $95 million related
to the job cuts and store closings, according to the statement.

Chief Executive Officer Howard Levine said fiscal second-quarter results “did not meet our expectations,” as the
company faced more competition and a more cash-strapped
customer. Sales fell 6.1 percent to $2.72 billion in the quarter
ended March 1.

The shares fell 3.2 percent to $57.17 at the close in New
York. They have lost 12 percent this year.

Other companies have recently said they’re shutting
locations to save costs amid more rivalry from mass and online
retailers. Staples Inc. last month said it will close as many as
225 stores in North America, while J.C. Penney Co. in January
said it plans to shutter 33 underperforming locations.